Auto stocks gained traction in Wednesday’s trade. Tata Motors is leading the rally, followed by Bharat Forge, Ashok Leyland, TVS Motor Company, and MRF. Nearly two-thirds of the Nifty Auto index constituents are in the green.
The Reason: the recently signed India-UK Free Trade Agreement (FTA), which is sparking positive sentiment across the auto sector. While overall trade volumes are still moderate, the deal is expected to significantly affect premium vehicle imports.
Under the new agreement, India will reduce tariffs on UK automotive imports from over 100% to just 10%. Import quotas will also be introduced. This change is expected to make premium British cars more affordable for Indian consumers.
Tata Motors will benefit the most from this deal, especially through increased domestic sales of its Jaguar Land Rover (JLR) line. Eicher Motors, which owns Royal Enfield and has a strong UK footprint, could see improved margins and higher volumes.
Lower import costs are also likely to improve competitiveness for other Indian auto players. This could help offset rising input costs and support profitability.
TVS Motor Company is optimistic. Managing Director Sudarshan Venu told PTI that the FTA would accelerate the scale-up of its British brand ‘Norton.’ The brand is set to launch later this year. “This agreement will help us scale faster and leverage common supply chains. We are excited as we further progress towards Viksit Bharat,” he said.
The deal is more than just an auto story. It marks the first major trade pact between India and the UK, aiming to double bilateral trade to $120 billion by 2030. Trade between the two countries already grew from $20.36 billion in FY23 to $21.34 billion in FY24.
By 2027, Indian exports to the UK—particularly in auto components, chemicals, and apparel—are expected to rise sharply under the preferential terms.
